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Annual Report

2015

Year 2015 1

Posti Group in brief 1

President and CEO's review 3

Key figures 6

Highlights in 2015 8

Cases 13

Strategy 22

Group strategy 22

Vision, mission and customer promise 24

Values 25

Business 26

Postal Services 26

Business environment and strategy 28

Key events in 2015 29

New products and services 30

Recognitions 31

Parcel and Logistics Services 32




Recognitions 37

Operations 38

Itella Russia 40



Recognitions 43

OpusCapita 44




Recognitions 49

List of contents

Posti Annual Report 2015

This pdf is composed of selected elements and may deviate from other generated documents. The entire report can be read at www.posti.com/annualreport2015



Sustainability 50

Sustainability at Posti 50

Highlights in 2015 54

Posti in society 56

Tax footprint 2015 60

Cooperation with stakeholders 64

Engaged multi-skilled employees 68

Responsible employer 70

People responsibility indicators 72

Reducing environmental impacts 76

A pioneer of green logistics 79

Environmental responsibility indicators 81

Responsible supply chain 84

GRI reporting 86

GRI content index 88

Governance 95

Governance model 95

Corporate Governance Statement 2015 96

1 Annual General Meeting 97

2 Supervisory Board 98

3 Board of Directors 100

4 Committees 102

5 President and CEO and other management 103

6 Remuneration 104

7 Other Corporate Governance 105

Remuneration Statement 108

Risk management 109

Supervisory Board 112

Board of Directors 113

Executive Board and Management Board 119

Financials 127

Board Of Directors' report 2015 127

Operating environment 2015 127

Performance improvement program 128

Net sales and operating result in 2015 129

Postal Services 131

Parcel and Logistics Services 132





Itella Russia 133

OpusCapita 134

Key Figures of Business Groups 135

Cash flow and capital expenditure 136

Research and development 137

Environmental impacts 138

Share capital and shareholding 139

Administration and auditors 140

Employees 142

Changes in corporate structure 143

Events after the financial period 144

Business risks 145

Legal proceedings 148

Outlook for 2016 149

Board of Directors' proposal for the distribution of profits 150

Calculation of Key Figures (IFRS) 151

Consolidated financial statements 152

Consolidated Income Statement and Consolidated Statement of Comprehensive Income 152

Consolidated Statement of Financial Position 153

Consolidated Statement of Cash Flows 155

Consolidated Statement of Changes in Equity 157

Notes to the Consolidated Financial Statements 158

Accounting policies 158

1. Operating segments 169

2. Acquired businesses and business divestments 173

3. Net sales 176

4. Other operating income 177

5. Materials and services 178

6. Non-recurring items 179

7. Employee benefits 180

8. Research and development costs 181

9. Depreciation, amortization and impairment losses 182

10. Other operating expenses 183

11. Financial income and expenses 184

12. Income tax expense 185

13. Intangible assets 186

14. Investment property 190

15. Property, plant and equipment 191

16. Associated companies 194

17. Financial assets and liabilities 195

18. Fair value hierarchy of financial assets and liabilities at fair value 197





19. Non-current receivables 200

20. Deferred tax assets and liabilities 201

21. Inventories 203

22. Trade receivables and other current receivables 204

23. Financial assets available-for-sale and financial assets held until maturity 205

24. Financial assets at fair value through profit or loss 206

25. Cash and cash equivalents 207

26. Non-current assets classified as held for sale and associated liabilities 208

27. Equity 209

28. Pension liabilities 210

29. Provisions 213

30. Interest-bearing loans 214

31. Trade payables and other non-interest-bearing liabilities 215

32. Operating leases 216

33. Pledges, commitments and other liabilities 217

34. Financial risk management 218

35. Related party transactions 225

36. Group companies 227

37. Events after the reporting period 229

Parent company financial statements 230

Income statement of the parent company, FAS 230

Balance sheet of the parent company, FAS 231

Cash flow statement of the parent company, FAS 232

Notes to the financial statements of the parent company, FAS 234

Accounting policies 234

Notes 1-3 237

Notes 4-7 238

Notes 8-10 240

Note 11 242

Note 12 243

Notes 13 244

Notes 14-15 246

Note 16 247

Note 17 248

Notes 18-20 249

Note 21 250

Note 22 251

Note 23 252

Board of Directors' proposal 253

Signatures of the Board of Directors' Report and the Financial Statements 254

Auditor's report 255





Statement by the Supervisory Board 257

Investor information 258





YEAR 2015

Posti Group in briefWe are your first choice in postal, logistics, and eCommerce services. We manage the flow of commerce andeveryday life in nine countries.

Our net sales in 2015 amounted to EUR 1,650 million. Business customers account for 96 per cent of the netsales. We employ 22,000 members of staff.

We have a nearly 400-year-old-history. Posti Group is owned by the state of Finland.

Posti Group has four business groups:

Postal Services,Parcel and Logistics Services,Itella Russia,OpusCapita.

Year 2015 / Posti Group in briefPosti Annual Report 2015

This pdf is composed of selected elements and may deviate from other generated documents. The entire report can be read at www.posti.com/annualreport2015 1

Year 2015 / Posti Group in briefPosti Annual Report 2015


President and CEO’s reviewPosti faced a very difficult business environment in 2015. Economic growth in Finland has been non-existent,and the development of consumer purchasing power has been subdued. Our net sales decreased across allof the business groups. The declining delivery volumes of letters and publications reduced net sales by EUR75 million. Domestic freight transport volumes decreased as the total market continued to decline. ItellaRussia’s net sales were eroded by the weak ruble and the problems the Russian economy is facing.

In spite of the decrease in net sales, the Group’s operating result remained at the previous year’s level. Thishas, however, required many substitution measures and difficult decisions. The most significant source ofsatisfaction was the strong improvement in the result of the Parcel and Logistics Services business group. Itsoperating result turned to profit on the strength of determined efficiency improvement measures andrestructuring. Going forward, we expect various logistics services to be the engine of Posti’s growth.

Posti’s operating result showed a significant improvement from the previous year. The improved result isattributable to the positive result of Parcel and Logistics Services as well as a sale and leaseback transactionworth EUR 120 million that involved Posti selling logistics properties located in Finland.

In Russia, the market situation became bleaker during the year. The substantially weaker national economy,declining consumer purchasing power and the weak ruble are currently complicating the business operationsof foreign companies operating in Russia, and Itella Russia is no exception. Unfortunately, the prospects for2016 involve significant continued uncertainty.

In spite of the difficult situation, our market position in Russia can be considered to be good. We are currentlythe market leader in warehouse operations in Russia, with operations not only in Moscow but also in six othercities with over a million inhabitants, and we also have a nationwide network of logistics centers in Russia.

Digitization creates opportunities

We announced our new strategy in the summer, with the primary objectives of renewing Posti to make it acustomer-oriented first-class service company and pursuing profitable growth in new services. We want to beFinland’s largest postal and logistics company with the broadest service range and network.

Digitization offers opportunities for improving the Group’s services and developing new business operations.Our marketing services make use of Posti’s data and analytics expertise in creating new additional services.

Although letter and publication delivery volumes are declining, the market for home services is growing. Theneed for meal and home help services is constantly growing as the population is ageing. We hold a keyposition in the development of new home services, as we visit the door of every Finn five times a week.

In addition to home services, a new growth area is offered by food logistics. During this strategy period, wewill expand our operations to temperature-controlled transports, including foodstuffs. Food logisticscomplements Posti’s logistics service portfolio and in part supports the growth targets of our company.

Year 2015 / President and CEO's reviewPosti Annual Report 2015


OpusCapita’s strategy, in turn, is aimed at becoming a strong provider of financial management softwareand processes in Northern Europe. OpusCapita will adopt new process robotics, continue transformationtowards cloud services and develop new solutions in order to improve the management of customers’ workingcapital.

A strong partner for online retailers

The strategy in parcel services is to act as an enabler of online shopping for Finnish companies andconsumers. We want to be the number one choice of consumers and a strong partner for online retailers. Newinformation system solutions bring efficiency to the delivery chain, speed up capital circulation among onlineretailers and support the growth of online shopping.

Our new robot-assisted hybrid warehouse in Vantaa and the new logistics center and eCommerce hub inLieto offer eCommerce operators as many as two or three additional days of sales during peak seasons.Customers, in turn, will enjoy fast delivery of their eCommerce orders, even on the day the order is placed.

The first provider of carbon-neutral postal services

As a significant logistics company, Posti takes responsibility for minimizing its environmental impacts. Posti isthe world’s first provider of carbon-neutral postal services.

In 2015, we expanded Posti Green to cover the parcel and logistics business in Finland, in addition to postalservices. In practice, this means that all of the services we provide are automatically, without an additionalcharge, Posti Green services. We are undeniably a pioneer of green logistics in Finland.

Renewal measures to ensure competitiveness

Posti has engaged in a significant renewal of its operations in response to tighter competition and decliningmail delivery volumes. Restructuring measures implemented in summer 2015 included rearranging thedomestic terminal network and launching the renewal of Posti’s retail network.

The new collective agreement for the postal industry, signed in late November, also supports Posti’s renewaland the improvement of Posti’s competitiveness. The past provisions concerning additional change securityare no longer included in the new collective agreement. As a responsible employer, we use Posti’s Uusi polku(New Path) support program to train people to help them find new jobs, become self-employed, or pursue anew profession.

The new collective agreement also eliminates previous restrictions on the use of supplementary workforceand subcontracting, for example during times of peak demand.

Significant structural transformation

Posti is currently undergoing a significant multi-year structural transformation of its industry. The decline inletter volumes cannot be halted. The two cornerstones of the company’s strategy are to react to the decliningletter volumes in a timely manner and pursue strong growth in new businesses. Posti has a solid financialstanding and the capacity to make investments.

I am confident in Posti’s ability to go through this transformation successfully.



Finally, I would like to take this opportunity to thank our personnel, customers and partners for their excellentcooperation during the year.

Heikki MalinenPresident and CEO



Key figuresPosti Group's financial targets are:

operating profit percentage exceeds 5%,return on invested capital is at least 10%,gearing does not exceed 35%,more than 10% of the Group’s net sales comes from new business areas in 2018.

Key figures of Posti Group

2015 2014 2013

Net sales, MEUR 1650.3 1,858.7 1,976.8Operating result (non-IFRS), MEUR *) 48.7 50.8 50.5Operating result (non-IFRS), % *) 2.9 2.7 2.6Operating result (EBIT), MEUR 55.9 5.8 9.9Operating result (EBIT), % 3.4 0.3 0.5Result before taxes, MEUR 43.3 -4.6 -2.4Result for the period, MEUR 36.0 -4.4 7.7Return on equity (12 months), % 6.1 -0.7 1.1Return on invested capital (12 months), % 6.3 1.0 1.3Equity ratio, % 47.8 45.9 47.5Gearing, % -10.5 17.2 21.1Gross capital expenditure, MEUR 60.6 57.5 61.1Employees on average 22,219 24,617 27,253Dividends, MEUR 18.0**) - - *) Non-IFRS = excluding non-recurring items **) Board of Directors' proposal to the Annual GeneralMeeting

Corporate responsibility key figures

2015 2014 2013 2012

Number of Posti's service outlets 1,401 1,450 1,310 1,098Result of the customer satisfaction survey 2.93 3.05 3.14 3.11Carbon dioxide emissions/net sales (tonnes) 0.097 0.096 0.09 0.1Share of employees in functions covered by the ISO 14001 EMS 88% 88% 77% 72%

Year 2015 / Key figuresPosti Annual Report 2015


Key Figures for Business Groups EUR million 2015 2014 Change

Net sales Postal Services 742.3 769.0 -3.5%Parcel and Logistics Services 596.7 722.7 -17.4%Itella Russia 118.9 172.0 -30.9%OpusCapita 256.7 259.6 -1.2%Other operations 8.7 48.6 -82.0%Intra-Group sales -73.0 -113.3 Group total 1,650.3 1,858.7 -11.2% Operating result (non-IFRS) *) Postal Services 56.4 66.0 -14.5%Parcel and Logistics Services 0.6 -21.7 -Itella Russia -5.1 2.5 -OpusCapita 14.5 20.0 -27.2%Other operations -17.7 -16.0 -Group total 48.7 50.8 -4.2% Operating result (EBIT) Postal Services 57.3 66.1 -13.3%Parcel and Logistics Services -12.6 -34.2 -Itella Russia -25.0 2.4 -OpusCapita 13.3 12.7 5.1%Other operations 22.8 -41.2 -Group total 55.9 5.8 867.5% Operating result (non-IFRS), % *) Postal Services 7.6% 8.6% Parcel and Logistics Services 0.1% -3.0% Itella Russia -4.3% 1.5% OpusCapita 5.7% 7.7% Group total 2.9% 2.7% Operating result (EBIT), % Postal Services 7.7% 8.6% Parcel and Logistics Services -2.1% -4.7% Itella Russia -21.0% 1.4% OpusCapita 5.2% 4.9% Group total 3.4% 0.3% *) Non-IFRS = excluding non-recurring items

Year 2015 / Key figuresPosti Annual Report 2015


Highlights in 2015During the year, we launched several new services and products, and we alsoannounced the company’s new strategy. The year’s highlights included the launchof Postinen, a robotic delivery helicopter experiment, and the opening of the Lietoterminal and the new warehouse in Vantaa’s Voutila district. We also completedcorporate transactions during the year, the most significant of which was thedivestment of the international freight business.

Q1

A new product for unaddressed marketingPosti launched Postinen, a new product for unaddressed marketing.Since the beginning of March, households have receivedadvertisements and other unaddressed items in a separate wrappedbundle twice a week. Postinen helps customers separate advertisingfrom other mail. Postinen is put together with the help of newtechnology that streamlines heavy work stages and speeds upoperations.

Q1

Kirsi Nuotto joins Posti’s Board of DirectorsPosti Group Corporation’s Annual General Meeting was held inHelsinki on March 18, 2015. Arto Hiltunen, Petri Järvinen, PetriKokko, Jussi Kuutsa, Päivi Pesola, Marja Pokela, and Suvi-AnneSiimes continued as members of Posti’s Board of Directors. KirsiNuotto was elected to join the Board as a new member. ArtoHiltunen continued as the Chairman of the Board of Directors andPäivi Pesola as the Vice Chairman.

Year 2015 / Highlights in 2015Posti Annual Report 2015


Q2

Posti and Helsinki Deaconess InstituteHoiva work together to expand their careand home servicesTwo traditional operators in their respective fields have found a newway to combine their competencies. Meal deliveries by Posti weresupplemented with other day-to-day home care services. The newservice was launched in Espoo in April by Posti and HelsinkiDeaconess Institute Hoiva, a provider of various care services.

Many senior citizens need assistance with simple tasks such as replacing light bulbs or hanging laundry. Thisneed is met by a new home service launched in Espoo by Posti in partnership with Helsinki Deaconess InstituteHoiva. The service involves the same person that delivers meals to the customer’s home also handlingadditional tasks such as heating and serving the meal, as well as other tasks such as cleaning the refrigeratorand taking out the garbage.

Q2

Posti divests its Scandinavian road freightbusinessIn April, Posti continued to improve the profitability of its logisticsbusiness operations in line with its strategy by selling itsScandinavian road freight business operations to the Danish NordicTransport Group (NTG). The transaction also included Posti’sinternational road, air, and sea freight business in Finland.

Posti continues to provide logistics services in Finland in parcelservices, company transport services, and supply chain solutions. In

Sweden, Posti continues in parcel operations, which are seeing strong growth due to eCommerce.International freight services will be offered through Posti’s partner network.



Q2

Posti commences the renewal of its retailnetworkPosti launched a renewal of its retail network in April. Going forward,Posti will operate 21 postal outlets of its own, and negotiationsbegan concerning 77 outlets to be transferred to partners. Posti willalso open 100 new service points and the total number of servicepoints will increase to 1,500.

The changes will be implemented one outlet at a time over the nexttwo and a half years as the negotiations with the partners proceed.

Q2

OpusCapita acquired Kredithanterarnaand Svenska FakturaköpOpusCapita acquired the Swedish companies Kredithanterarna andSvenska Fakturaköp in late April. The acquisitions see OpusCapitafurther strengthen its offering in Order-to-Cash management.

The acquisitions were a logical step in realizing OpusCapita’s goal ofproviding its customers with a comprehensive solution for Order-to-Cash management. Kredithanterarna brings strong industryexpertise from the Swedish market to OpusCapita.

Kredithanterarna’s management and organization remained unchanged as it became part of OpusCapita.



Q2

New strategy geared towards renewalIn June, Posti Group announced its new strategy and focus areas for2015–2017. Posti aims to be the first choice for its customers as theprovider of postal and logistics services in 2018. The most importantfinancial target for Posti is to maintain good profitability.

The change taking place in the postal sector will become more rapidin the next few years when letter and publication distributionvolumes fall as a result of electronic communications. Digitization willchange Posti’s business models and create new services and growth

opportunities. At the same time, competition will become more fierce in postal and logistics services, and therole of eCommerce will become more prominent. The best customer experience, multi-channel service, thecapability to reform, and competent personnel are the most important success factors.

These trends lie in the background of Posti Group’s strategy to reform the company into a customer-oriented,first-class, profitable postal, and logistics service company.

Q4

Patrik Sallner appointed CEO ofOpusCapitaOpusCapita appointed Patrik Sallner (MBA, MA, M.Sc., 45) as its newCEO effective from October 5. Before joining OpusCapita, Sallnerwas the CEO of MariaDB Corporation. Prior to that, he held executivepositions at international companies such as F-Secure, Nokia, andMcKinsey.



Q4

Mail deliveries enter the digital age as maildelivery personnel start using smartphonesPosti’s customers will be offered even more tailored services afterPosti equips its mail delivery personnel with smart devices. The smartdevices give mail delivery personnel on-the-move access toimportant information on changes related to mail deliveries, onlinepurchases, meal deliveries or other services requested by customers.

Each day, mail delivery personnel contact some three millionhouseholds and businesses. For many of them, buying services via

digital channels is a daily occurrence. The introduction of tools that bring mail delivery operations to thedigital age is part of Posti’s ongoing effort to modernize its services and diversify delivery operations.

The piloting of the devices began in late 2015. The equipment purchases for thousands of units will begin in2016.

Q4

Posti's new logistics center in Lieto boostseCommercePosti's new logistics center, opened in the fall near Turku in Lieto, isthe hub of eCommerce. A substantial number of online storeshipments arriving in Finland through the ports of the Turkueconomic region and shipments exported from Finland go throughthe hub in Lieto.

Posti's technology investments and renewed services meet the needsof growth in eCommerce. They give vendors more selling days and

consumers the option of receiving parcels on the same day. The number of parcels will increase at an annualrate of 4–5 percent due to eCommerce.

The logistics center in Vantaa, featuring robot-assisted hybrid storage, and the Lieto logistics center,equipped with the latest sorting technology, are Posti's answer to the wishes of parcel and eCommercecustomers. Posti has one of the most modern sorting and service solutions of its scale in Europe in terms oftechnology and service integration.



CASE: European stamp promotes greenthinking

In spring 2016, European postal operators will publish ajoint Think Green stamp that features the same image in allcountries. The motif was selected in a joint designcompetition organized by PostEurop, the association ofEuropean public postal operators. The winner of thecompetition was a postage stamp designed by DoxiaSergidou from Cyprus. Posti also participated in the designcompetition.

The Think Green stamp is the 60th issue in the EUROPAseries. Each country will add their own country indicationsand values to the stamp. The stamp will be published inFinland in May 2016.

The motif of the winning design shows a hand holding apaint roller that is painting over a gray polluted scene to create a greener and more environmentally friendlylandscape.

“The green color symbolizes hope and inspires us to build a better world. The stamp shows us that it is in ourhands to create a greener planet,” Doxia Sergidou explains.

CASE: Finland takes first place in drivinghabit competition

Finnish representatives Heikki Toikkanen and Päivi Blomtook first place in the Drivers' Challenge driving habitcompetition organized by Posti and the International PostCorporation (IPC) in Ivalo in March. The runner-up pair wasTadgh Linehan and Tommy Dempsey from Ireland, withAndres Rojas Ruiz and Santiago Munoz of Spain finishingin third place.

In the international driving habit competition, postalworkers from various countries competed in driving in themost ecological and safe manner. The competitors’ vehiclehandling skills were tested on a skills course that includedslalom driving on a cone track, parallel parking and zigzagreversing between marker poles. The Eco course assessedthe participants’ economical driving style on a 15-kilometer

Year 2015 / CasesPosti Annual Report 2015


track that included delivering letters to mailboxes and handing over a parcel to a customer.

The International Post Corporation (IPC) is a postal operators’ cooperation organization with members in 24countries.

CASE: Confectionery logistics in RussiaRussian confectionery company UNICONF selected ItellaRussia as its sole logistics and warehouse partner in thesummer of 2015. The two companies have beencooperating since 2006.

UNICONF is the largest confectionery company in EasternEurope and the market leader in Russia. Their storagevolume requires more than 20,000 pallets and theymanufacture a wide range of consumer confectionery, fromcandies to cakes to chocolate, all of which have a rapidturnover. This demanding rate of production has promptedItella Russia to hire more employees, based at its Krekshinowarehouse, ensuring that the needs of warehouse andhandling services are met.

Itella Russia, part of Posti Group, has been operating in Russia since 2008. Group has over 2,800professionals serving both local and global brands in Russia. There is altogether 500,000 m² in warehousespace across the country.

CASE: Posti delivers fan merchandise forJokerit

The Jokerit ice hockey team redesigned its online store forfan merchandise in late spring. As part of the renewal,Jokerit selected Posti as its supply chain solutions partner.

Starting from August 2015, Posti has handled productwarehousing, transport and parcel delivery, as well asrelated services such as gift wrapping. The partnershipextends beyond simple warehousing services to cover theentire order-supply chain.

“As a well-known, reliable and modern operator, Posti is anexcellent partner for Jokerit. The demand for our fanmerchandise is constantly growing, and Posti ensures thatwe can serve our supporters quickly, reliably, and cost-



effectively,” says Jukka Kohonen, CEO of Jokerit.

Posti’s first automated warehouse, which is among the most modern in Europe, is ideally suited to the needsof eCommerce. Automated order picking at the automated warehouse that was completed in Vantaa’sVoutila district in the fall will further speed up Posti’s deliveries and offer a unique competitive advantage toonline retailers.

CASE: Digitization represents a greatopportunity

Posti was in Pori in July to participate in SuomiAreena, thesummer’s largest discussion event on topics of socialsignificance. The topic of the panel discussion Postiparticipated in was “What is the impact of digitization oncommerce and the economy?”.

The panelists included Heikki Malinen, CEO of Posti Group,Olli Rehn, Minister of Economic Affairs, Juhani Pekkala,Managing Director of the Finnish Commerce Federation,and Leena Mörttinen, Executive Director of Family BusinessNetwork Finland. The panel was moderated by KristiinaHelenius, CEO of AmCham Finland.

The panelists described digitization as a great opportunity,as long as we in Finland ensure that we keep up with its

development and preferably lead the way.

“It is a key objective for us, including the Government, to restore Finland’s position as a leader in digitalcompetence and digitization. Digital competence is one of the spearhead projects in the Governmentprogram, and it is key to Finland’s future success,” Olli Rehn explained.

Juhani Pekkala pointed out that the digital transformation takes place through various businesses andhighlighted the importance of boosting their capacity to respond to the need for change and renewal. TheFinnish Commerce Federation organizes eCommerce training events that have already attracted hundredsof participants.

“Digitization is an explosive phenomenon. Is Finland and the Finnish system sufficiently quick and agile tochange with the times and ensure our continued competitiveness,” Leena Mörttinen asked.

CASE: Robot helicopter delivered parcels



CASE: Robot helicopter delivered parcelsto Suomenlinna

In September, Posti carried out an experiment to test thetechnology of the future in eCommerce logistics and maildelivery. The experiment involved testing a robotichelicopter in delivery and transport tasks for the first time inFinland, and for the first time in Europe in an inhabitedurban environment.

The robotic helicopter flew with a parcel for example frommainland Helsinki to the island of Suomenlinna, a UnescoWorld Heritage Site.

The experiment was part of Posti’s continued process ofrenewal. Together with its customers and partners, Postidevelops and tests quick and easy delivery solutions andmethods to support eCommerce. New technologies make

online shopping quicker and easier for both senders and recipients.

Posti’s partners in the experiment were Sharper Shape Ltd, which is responsible for the technology andoperation of the robotic helicopter, and Verkkokauppa.com. The experiment was authorized by the FinnishTransport Safety Agency (Trafi) operating under the Ministry of Transport and Communications.

CASE: Seamless Purchase-to-Pay chain



CASE: Seamless Purchase-to-Pay chainThe housing investment company SATO has a clear goal: apredictable and transparent process from purchase topayment.

SATO outsourced its accounts payable tasks to OpusCapitain summer 2014. The solution includes accounts payabletasks and systems as a cloud service, as well as processdevelopment. In early 2015, SATO implemented a newprocurement system provided by OpusCapita’s partner.

“We decided to partner with OpusCapita because they havea comprehensive approach and the capacity to providesystems and services to suit our needs on a tight schedule. Iam very satisfied with their capacity for cooperation andflexible approach to their work. OpusCapita customized its

solution to ensure that it suits our specific needs,” says Yaron Nadbornik, Head of Procurement at SATO.

SATO receives invoices from 1,800 suppliers. In addition to SATO’s own employees, purchase invoices areapproved by 40 Property Managers employed by Realia Management Oy. Outsourcing accounts payable toOpusCapita has already accelerated our purchase invoice turnover, and the effectiveness of the new processwill be further increased by the automatic reconciliation of purchase orders and purchase invoices.

CASE: Printed advertisements are morememorable

“A printed advertisement is up to 24 times more memorablewhen people can see and touch it, compared to only seeingit,” says David Brennan, one of the authors of the 'PrivateLife of Mail' study by Royal Mail. Brennan discussed theresults of the study at a customer event for Posti’s MarketingServices in August.

The study is groundbreaking in that it combines traditionalmarket and media research with brain research, interviews,and analyses as well as ethnographic research, which dealswith the customs of peoples and cultures.

The study shows that printed advertising plays a significantrole in consumers’ purchasing behavior. Printedadvertisements provoke a more emotional response in

consumers than television and online advertising, for example. They also exhibit better recall of what they



read, and printed advertisements are effective in driving consumers to make purchases online.

“Sending a tactile advertisement in a highly technological, digital world may become a key factor inencouraging consumers to make purchasing decisions,” Brennan explains.

CASE: Quite a jigsaw puzzleOlvi’s Timo Tikkanen and Posti’s Jari Vänskä work withtheir colleagues to put together a jigsaw puzzle comprisedof hundreds of little details to ensure that Posti’s truck andtrailer combinations transport Olvi beverages acrossFinland in a timely and safe manner. Tikkanen works as aLogistics Planner at Olvi’s offices in Iisalmi, while Vänskäworks as a Transport Planner at Posti’s TransportationManagement unit in Kuopio.

During peak times, the production facility in NorthernSavonia ships out more than 70 truckloads of beer, cider,soft drinks, and mineral water. Around Midsummer,Christmas and the winter vacation period, Finnishconsumers buy hundreds of thousands of liters of Olvibeverages per day.

The cooperation began in 2004 between Olvi and Transpoint. Transpoint’s business operations weresubsequently transferred to Posti as a result of an acquisition completed in 2012.

The cooperation has gradually grown into a comprehensive partnership. Posti transports Olvi products toOlvi’s own terminals or terminal facilities leased to Olvi by Posti, as well as to central wholesale corporations.The products are then distributed to supermarkets and grocery stores, cafés, restaurants, kiosks and events.Posti also handles the distribution and shelving of brewing industry products in certain parts of Finland.Recycled glass and plastic bottles, as well as aluminum cans, are then backhauled to Olvi by Posti. Theshipments also include shipping cartons and pallets.

CASE: Posti is responsible for Anttila’s



CASE: Posti is responsible for Anttila’ssupply chain services

Anttila and Posti signed in December an agreement on thesupply chain services in Finland for all department storesand online stores of Anttila. Under the agreement, Posti isresponsible for the warehousing services of 25 Anttiladepartment stores, nine Kodin1 department stores andAnttila.com and Kodin1.com online stores with associatedvalue-added services, transport of products to the storesand transport and return services of online store productsfor consumer customers.

- We feel honored that one of the biggest commercialplayers in Finland has chosen us as their logistics partner.We are in a unique position to be able to bring Anttila'sonline and department store warehousing along with theirvalue-added services under one roof and offer an optimal

delivery service to store and to the end customer, says Harri Kämppä, Head of Supply Chain Solutions atPosti.

Anttila is continuing restructuring work and new department stores will continue to open in the course of2016. The company's supply chain and logistics function is part of this ongoing restructuring work.

- When choosing a supply chain solutions provider, what mattered to us was ensuring that the companywould provide the solutions required to support the Anttila reform program. We consider our agreement withPosti more than just a service agreement, that is, as a partnership agreement when building a successful,multi-channel Finnish retail enterprise, says Arto Gauffin, Supply Chain Director, Anttila.

CASE: Posti made youngsters move on the



CASE: Posti made youngsters move on thefootball pitch

Posti has a long history of supporting Finnish football, bothat the top and at the grassroots level. We were the maincooperation partner of the Football Association of Finlandfrom 1994 to 2015.

As part of our partnership with the Football Association ofFinland, we promoted a better future and physical activityamong young people under the Osoitteena Futis (“TheAddress is Football”) project. Participating clubs sponsoredby Posti organized some 400 events at daycare centers andschools during the year, which brought some 200 newplayers to the sport and helped launch nearly 100 newactivity groups.

The project has three target groups: supporting football asa hobby among girls and boys, as well as supporting the development of recreational group activities. Thegoals include increasing the number of players under the age of 10, as well as developing cooperationbetween daycare centers, schools, and football clubs.

CASE: Meal delivery service wins a



CASE: Meal delivery service wins acorporate responsibility award

Posti’s meal delivery service won PostEurop’s CSR Coups deCoeur corporate responsibility award. The Association ofEuropean Public Postal Operators, which has members in 52countries, awarded prizes in three categories: environment,employees, and society. Posti won a gold medal in thesociety category. The purpose of the awards is to highlightthe best practices of social responsibility by postaloperators in Europe.

Posti delivers meals directly to the homes of elderly people,either as hot or cold deliveries, in more than 40 locations.Furthermore, we make meal deliveries to different types ofinstitutions, such as daycare centers and schools, in 80municipalities.

“Posti is a highly sought-after partner because we have the fleet and human resources to engage in thesetypes of daily operations with a short duration,” explains Jyri Westerholm, Product Manager at Posti.

Meal deliveries are a great example of a win-win concept. Municipalities benefit from Posti’s extensivedistribution network and fleet by outsourcing transport operations to an efficient and specialized partner. Atthe same time, Posti achieves more work for its drivers and more deliveries as the amount of traditional letterdeliveries diminishes. The mail carriers, too, are keen on meal deliveries as they offer variation to the workdayas well as interesting encounters with customers such as senior citizens.



Corporate strategyThe Board of Directors of Posti Group has specified the company's strategic goals for 2015–2017. They aretargeted at renewing Posti and improving profitability in new services. Posti aims to be the first choice for itscustomers as the provider of postal and logistics services in 2018. The most important financial target forPosti is to maintain good profitability.

The change taking place in the postal sector will become more rapid in the next few years when letter andpublication distribution volumes fall as a result of electronic communications. Digitalization will change Posti'scurrent business models and create new services and growth opportunities.

At the same time, competition will become more fierce in postal and logistics services, and the role ofeCommerce will become more prominent. The best customer experience, multi-channel service, the capabilityto renew, and competent personnel are the most important success factors.

These trends lie in the background of Posti's strategy to renew the company into a customer-oriented, first-class, profitable postal and logistics service company.

Posti’s strategic focus areas for 2015–2017 are:1. We will defend the distribution business of publications and direct marketing by extending the productlifecycle so that it is as long as possible. We will shape our capacity with the aim of maintaining good costcompetitiveness and service capability when letter and publication volumes are decreasing.

2. We are Finland's leading logistics service provider in parcel, warehouse and transport businesses and amajor logistics operator in Russia. We create solutions that enable the online shopping of goods.

3. We improve the customer experience through multi-channel digital services and develop Posti's services tomeet customers' needs.

4. Posti has access to an efficient, process controlled, digitalized nationwide production network that ismanaged in a high quality manner and on which we will base our growth.

5. OpusCapita is an important part of our Group and will be turned into a strong provider of financialmanagement software, processes, and automation services in Northern Europe.

6. We look for synergy benefits from new growing markets. Home services, meal deliveries, and food logisticsmake use of Posti's nationwide distribution network. We develop new data and analytics services to meetcustomers' needs.

7. We develop the competence of our personnel in new services and the capability to address theopportunities of digitalizing business systematically. Our aim is to be the best workplace in the industry.

The Business Groups' operating environments and strategic goals are described in more detail in BusinessGroups' own sections.

Strategy / Group strategyPosti Annual Report 2015


Strategy / Group strategyPosti Annual Report 2015


Vision, mission, and customer promiseVISION:

Our vision is to be customers’ first choice in postal, logistics, and eCommerce services.

MISSION:

Our mission is to manage the flow of commerce and everyday life.

CUSTOMER PROMISE:

Our customer promise is to be easy, fast, reliable, and responsible.

Strategy / Vision, mission and customer promisePosti Annual Report 2015


Succeeding together with thecustomer

We provide added value for the customer ineverything we do.We proactively provide services and solutionsbased on excellent understanding of thecustomer’s business.We serve customers as One Posti through ourentire service chain.We work close to the customer.

Driving for improvement andinnovation

We are open minded towards change anddevelopment.We build on our strengths and welcome newideas to enhance our profitability.We continuously learn and grow both asindividuals and as a company.We execute changes thoroughly; wecommunicate openly, learn from experiences,and adjust when needed.

Taking responsibility

We commit to decisions and make themhappen.We keep our promises to each other to fulfillour commitment to the customer.We are trustworthy and base our business onreliability.We care for our people, the environment, andsociety.

Winning together

We work together to reach our common goals.We share information and best practices.We are team players and respect each other.We are proud of Posti and our work.

Values

Strategy / ValuesPosti Annual Report 2015


BUSINESS

Postal ServicesPostal Services is in charge of Posti's mail, press, and marketing services. The business group's ownpersonnel focuses on product development, product management, customer relationship care, and sales.

Mail Services is in charge of letter services offered to companies and consumers, stamps, mail redirectionservices, Netposti, and international postal cooperation. The unit produces and develops services that enablePosti to play a strong and important role in personal communications.

Press Services produces and develops newspaper, magazine, and free distribution paper delivery services forbusiness customers.

Marketing Services produces and develops services for marketing. Most of the business today is deliveryservices for addressed and unaddressed direct marketing as well as value-added services, such as registerservices, target groups and the Contact service. We also develop new digital marketing services.

Business / Postal ServicesPosti Annual Report 2015


Business / Postal ServicesPosti Annual Report 2015


Business environment and strategyAs a company, Posti is in a completely different situation than five years ago. Digitization is reducing dailymail delivery volumes, while letter volumes are declining at an annual rate of approximately 10%. Posti’smonopoly position will permanently become a thing of the past in 2016 when an amendment to the FinnishPostal Act makes it possible for practically any operator to offer mail delivery services.

Digitization and competition are revolutionizing the future of the postal industry as a whole. Due to decliningvolumes, mail delivery will become a substantially loss-making activity by 2019 barring improvements inoperational efficiency and the development of new business. We want to take a pioneering role in this periodof transformation.

The strategic goal of Postal Services is to hold a leading position in personal communications and servicesdelivered to homes, as well as multi-channel and real-time targeted marketing.

The aging of the population creates demand for home services, and home services also provide businessopportunities for Posti. We will also introduce new marketing services and make digital marketing solutions astronger part of our service offering. Growth opportunities can be found in both multi-channel marketing andthe utilization of data. By developing various regional models, our Press Services unit can be an attractivepartner to both existing and new customers.

In addition to growth, we also want to ensure profitability. This will be pursued through a renewal of ourproduct offering, pricing, the development of delivery models, and new sorting technology. This process ofrenewal will also benefit our customers: our services will become even better at making their everydaylife smoother.

Business / Postal Services / Business environment and strategyPosti Annual Report 2015


Key events in 2015Posti signed an extension agreement with Ilkka-Yhtymä on newspaper delivery cooperation in SouthernOstrobothnia and Vaasa. The solution ensures an optimal service level and cost-efficiency in the delivery ofthe newspapers Ilkka and Pohjalainen. We have developed the delivery model in partnership with Ilkka-Yhtymä since 2007. The delivery model benefits the readers of the newspapers most of all. Satisfied readers,in turn, mean work for our highly professional delivery personnel.

Shipments to Russia from Chinese online stores increased our net sales by tens of millions of euros in 2015.This proves that we have the capacity to offer a reliable and transparent eCommerce supply chain that has acompetitive lead time, which allows us to meet customer expectations.

We published approximately 20 new stamp releases during the year. The themes of the stamps included forexample International Women’s Day and Jean Sibelius. Heavier music was represented in the year’s stampsby Hanoi Rocks, The Rasmus, HIM, Apocalyptica, Children of Bodom and Nightwish. Finns voted the Easterstamp Spring twitter as the most beautiful stamp released in 2015. In the stamp a great tit sings on a branchwith willow catkins.

The number of users of Posti’s electronic mailbox Netposti increased by 8% during the year to approximately636,000. The Netposti service can be used to receive official letters, such as invoices, from more than 22,000businesses and organizations. Using Netposti offers the sender cost savings and quicker communication.Electronic letters reach their recipients 1–2 days faster than paper letters. Invoices and salary slips, forexample, are available via Netposti anytime and anywhere.

Business / Postal Services / Key events in 2015Posti Annual Report 2015


New products and servicesOne of the most significant new products of the year was Postinen, which was launched at the beginning ofMarch 2015 as a new medium for unaddressed advertising. Households now receive advertisements andother unaddressed items in a separate wrapped bundle twice a week.

Advertisements, free distribution papers, and other unaddressed mail are automatically bundled inside apaper wrapping. The wrapping itself also serves as a new marketing medium for advertisers. The goal is toimprove the competitiveness of paper-based communications and the profitability of delivery operations inthe face of a rapid increase in digital communications, as well as to reduce the time spent on the manualsorting of advertising mail.

The Posti Home Services project develops new business based on home-delivered services. Our network ofprofessionals and transport fleet cover the entire country and they can be used for the benefit of ourcustomers in many ways in addition to the delivery of shipments and meals, as we reach 2.8 millionhouseholds every working day. At Posti, we are used to having confidential encounters with customers as partof delivering mail and other goods. At the same time, we can help to create new jobs even as the volume oftraditional letter mail is decreasing. We piloted various home-delivered services during the year in differentparts of Finland.

Early in 2016, we began piloting a new service called Call & Check Visit in Oulu that involves deliverypersonnel making a personal visit to greet the customer. During these brief visits, the customer’s well-being ischecked in conjunction with the delivery of mail. In the pilot, delivery personnel who have received specialtraining for the task will deliver the day’s mail, meet the customer, and have a brief conversation following aloose script. Regular visits to greet the customer help create a sense of security and support day-to-day life athome.

Business / Postal Services / New products and servicesPosti Annual Report 2015


RecognitionsOrganized by Grafia, the Association of Visual Communication Designers in Finland, the Best of FinnishAdvertising and Design is Finland’s most significant competition in the field of marketing communicationsand design. Posti’s Tom of Finland stamps won the Gold prize in the Graphic Design category. Graphicdesigner Timo Berry designed the stamps to celebrate the life’s work of artist Touko Laaksonen.

Business / Postal Services / RecognitionsPosti Annual Report 2015


Parcel and Logistics ServicesThe Parcel and Logistics Services business group is in charge of comprehensive supply chain solutions, parceland eCommerce services, transport services, retail network as well as warehousing and supplementaryservices in Finland and the Baltic countries. We are the market leader in Finland in the B2C and B2B parcelbusiness and in warehousing services. In transport services we are among the three largest operators inFinland.

Number of service points

Business / Parcel and Logistics ServicesPosti Annual Report 2015


Business / Parcel and Logistics ServicesPosti Annual Report 2015


Business environment and strategyIn logistics, the competitive situation was tough throughout the year. The recession has slowed down themarket, and volumes in heavy traffic have been on the decline in Finland for several consecutive years.Nevertheless, goods and products are constantly being transported and stored. The growth of eCommerce isalso creating new opportunities in logistics.

Our strategic goal is to maintain a strong market position and achieve profitable growth. As the marketleader, we are a high-quality and cost-effective service provider for our customers, and our services are easyto buy.

We have the largest retail network in Finland and, during the first quarter of 2016, our retail network in theBaltic countries will also become the largest in that region. We improve the accessibility and cost-effectiveness of our retail network through partner solutions as well as digital services.

We continuously renew and develop our products and services. We improve the efficiency and utilizationrates of our warehouses. As leveraging information technology is at the core of our entire strategy, we areinvesting in robotics, hybrid warehouses, and the management of material and information flows.

We seek significant growth in logistics outsourcing solutions. We are also taking new steps in food logistics, in-house logistics and eCommerce for food products, and we are investing in logistics services for the publicsector.

We operate in Finland as a common carrier. This means that we are a neutral domestic delivery serviceprovider that does not operate international traffic of its own and does not compete with other internationaloperators in international traffic. We offer international carriers the “last mile” of the flow of goods.

Business / Parcel and Logistics Services / Business environment and strategyPosti Annual Report 2015


Key events in 2015We concluded several significant customer contracts late in the year, with major players such as MARSNordics, JD.com, Anttila, TeliaSonera, and Verkkokauppa.com outsourcing their supply chain solutions to us.We continued to improve the profitability of our logistics business in line with our strategy by selling ourScandinavian road freight business operations to the Danish Nordic Transport Group in the spring. Goingforward, international freight services will be offered through our partner network.

We also launched a renewal of our Retail Network in the spring. Posti will operate 21 postal outlets of ourown, and we began negotiations concerning 77 outlets to be transferred to partners. We will also open 100new service points. The changes will be implemented over the next two and a half years.

In September, we tested a robotic helicopter in delivery and transport tasks for the first time in Finland, andfor the first time in Europe in a populated urban environment. The robotic helicopter flew with a parcel forexample from mainland Helsinki to the island of Suomenlinna.

Late in the year, we opened a robot-assisted hybrid warehouse in Vantaa that seamlessly combines anautomated warehouse with a pallet warehouse and a small-item warehouse. The new logistics center weopened in Lieto late in the year is a hub for eCommerce. Our logistics center in Vantaa, the robot-assistedhybrid warehouse, and the Lieto logistics center offer eCommerce operators as many as two or threeadditional days of sales during peak seasons. Customers, in turn, will enjoy fast delivery of their eCommerceorders, even on the day the order is placed.

Business / Parcel and Logistics Services / Key events in 2015Posti Annual Report 2015


New products and servicesMeal deliveries by Posti were supplemented with other day-to-day home care services in the spring when weintroduced a new home service in partnership with Helsinki Deaconess Institute Hoiva. The same person thatdelivers meals to the customer’s home also handles additional tasks such as heating and serving the meal, aswell as other assistance such as cleaning the refrigerator and taking out the garbage.

Viilea, a refrigerated mailbox, is used to deliver mail and consumer goods requiring cold storage without thecustomer having to be at home to receive them. We were the first operator in Finland to successfully test theservice. The pilot started in summer 2015 in partnership with the senior citizens’ services of the City of RaumaDepartment of Social Services and Health. The grocery bags were delivered to refrigerated Viilea mailboxesinstalled in front of the assisted living facility.

Following the expansion of our retail network in the Baltic countries, our network of pickup locations foreCommerce parcels now also covers Latvia and Lithuania. In Estonia, Posti’s parcel point network holds ashare of one third of the Estonian parcel market. The number of parcel points in Estonia currently stands at82.

Our new cloud service GLUE (Generic Layer for Universal eCommerce) provides eCommerce withopportunities for growth. GLUE brings customers, online stores, and suppliers under the same network. GLUEtransfers the customer's order from the online store to the cloud service where the delivery can be directed tothe customer directly from the supplier's storage, the online store's own storage, Posti's storage, or through amulti-channel retailer’s physical retail locations.

Over the next two years, we will gradually implement a modern warehouse management system. With world-class technological capabilities, the system will enable improvements such as the optimization of automatedwarehouse operations. The system will be implemented at all of Posti’s warehouses in Finland.

We signed an agreement with the City of Tampere on local logistics services delivered to customers ofmunicipal services for the elderly who live at home. Examples of the goods delivered include incontinenceproducts and library books. The number of deliveries is estimated at 10,000 per year. Starting in October, wehave handled the transportation of materials between 43 libraries in Southwest Finland. The goods carriedare mostly books, but other library materials are also included.

A tradition that goes back 45 years continued when advance voting for the Finnish parliamentary electiontook place in April at 912 advance voting locations across the country, 38 of which were Posti outlets. Inaddition to Posti outlets, we also organized advance voting in two shopping malls.

At the turn of the year 2015–2016, we opened Finland’s most versatile and efficient service center for fashionlogistics in Orimattila’s Pennala district. In conjunction with this, we relocated our fashion logistics functions toPennala from the Sopenkorva district of Lahti. We offer fashion logistics customers a comprehensive range ofsupplementary services: custom sewing, repair sewing, printing, embroidery, ozonization/odor removal, stainremoval, and eCommerce solutions.

Business / Parcel and Logistics Services / New products and servicesPosti Annual Report 2015


RecognitionsPosti’s innovative meal delivery service won PostEurop’s CSR Coups de Coeur corporate responsibility awardin the Society category. The Association of European Public Postal Operators, which has members in 52countries, awarded prizes in three categories: Environment, Employees and Society. We deliver meals innearly 100 municipalities. In addition to delivering two million meals to homes per year, each day we deliver500,000 meals to day-care centers, schools, assisted living facilities, and other municipal locations.

The Viilea refrigerated mailbox and the Alepa Kauppakassi service, introduced in 2014, receivedinternational recognition when Euromonitor International ranked it third among new retailing concepts.

Business / Parcel and Logistics Services / RecognitionsPosti Annual Report 2015


OperationsThe mission of Posti’s Operations unit is to ensure high-quality mail, parcel, and logistics services in Finlandand to engage in developing new services to meet customer needs. The Operations unit ensures that wereach approximately 2.8 million Finnish homes and approximately 200,000 business customers in an optimalfashion.

We have the best and most comprehensive service network in Finland. We deliver over eight million postalitems each day, which adds up to over two billion postal items per year. Posti’s delivery and transport fleetcovers around 200 million kilometers per year.

Our strategy highlights four key areas: cooperation with customers, increasing automation, a process-oriented production network, continuous route optimization, and bold exploitation of digitalization. Ourgoals are an improved customer experience, higher quality and enhanced cost-effectiveness, flexibility, andsafety at work.

Cost-effectiveness through joint operations

In early 2015, Postal Services’ and Parcel and Logistics Services’ production units merged and a newOperations unit was launched. Joint operations allow us to produce high-quality, cost-effective services, andto experiment and develop new services quickly and in an agile manner. We continuously measure allprocess components in order to be able to effectively manage our operations.

Last year, we tested a number of new services and launched, for example, Postinen. The Operations unit playsa key role in the development of new products, specifically in ensuring efficient, high-quality productionmethods that meet customer needs. This is particularly important for enhancing existing and developing newservices.

Increased automation

Over the course of the year, we invested in increased automation, specifically in letter, publication,advertisement, and parcel sorting. We increased automation at the Helsinki postal center and invested in thebundling machines required for Postinen production. We have been able to use the bundling machines toinsert unaddressed advertisements inside Postinen folders instead of inserting the advertisements manually.In the autumn, we also began test using a new-generation sorting machine and enhanced the use of ourcurrent sorting machines.

Last year, we invested in process management and network design, which allowed us to improve the deliveryaccuracy of our parcel and freight services according to customer needs. We adapted our freight terminalnetwork, invested in a new joint operations terminal in Joensuu, and launched terminal construction inPirkkala.

We enhanced our delivery network by optimizing mailbox grouping and the number of mailboxes. Wegrouped mailboxes in different parts of Finland in cooperation with our customers. We have been groupingmailboxes since the late 1970s. Over 80% of the mailboxes in Finland have been grouped, and groupingoperations will be continued in 2016.

Business / OperationsPosti Annual Report 2015


Posti also has the use of top expertise and tools that allow us to plan and optimize delivery route design. Thesensors in our delivery vehicles report the location of the vehicles in real time. The information collected bythe sensors has enabled us to enhance vehicle usage rates and to promote safer, more environmentallyfriendly driving styles.

The Posti Mobile project brings mobile equipment to mail deliverers

We have also launched the Posti Mobile project. In 2016, all delivery employees will be given the use ofmobile smart devices. This way, we will be able to provide more flexible and effective services to ourcustomers.

We are conducting a number of experiments together with our customers and partners to investigate the usesof digitalization and the industrial Internet. For example, the sensors in our vehicles offer many types of usefulinformation concerning the road condition, telecommunications network signal strength, fuel prices, andtraffic flow.

Business / OperationsPosti Annual Report 2015


Itella RussiaWe offer our customers comprehensive logistics solutions comprised of warehousing, freight and marketingservices. We serve our customers in all significant economic regions in Russia, from St. Petersburg toVladivostok. We are the market leader in warehousing and 3PL (3rd party logistics) solutions. Our solutioncovers the entire supply chain from picking to packaging and warehousing.

Having first established our company in Russia in 1996, this year marks the 20th anniversary of ouroperations. We have operated under the Itella brand since our merger with NLC (National LogisticsCompany) in 2008. Today, our organization also includes Itella Connextions, which is one of the largestdirect marketing specialists in Russia.

We have over 2,800 employees, over 500,000 square meters of storage space in a total of 15 warehouses,as well as a transport fleet of our own in Russia. Our customers are well-known international companiesrepresenting a variety of sectors ranging from the automotive industry to the fashion business, consumerelectronics and the pharmaceutical industry. All of our operations are certified under the ISO 9001 and14001 standards.

Business / Itella RussiaPosti Annual Report 2015


Business environment and strategyThe economic situation in Russia remained challenging throughout the year. Net sales were negativelyimpacted by the general weak economic situation as well as lower demand for air and sea freight, and lowerwarehouse processing volumes. Nevertheless, our warehouse fill rate was at a good level. During the year, wewere also successful in acquiring new customers as well as reacquiring old customers.

Many European companies exited the Russian market in 2015. For us at Posti, however, Russia remains a keymarket alongside Finland. Due to the economic situation in Russia, our business unfortunately involves adegree of uncertainty, and we are unable to predict when the Russian market will turn to growth. In the longrun, Russia remains an attractive market for logistics and eCommerce services.

While the Russian economy is contracting, eCommerce is still growing. Russia is among the ten largestconsumer eCommerce markets in the world. This offers us new business opportunities.

In line with our strategy, the sectors we focus on include fast-moving consumer goods, the pharmaceuticalindustry, the automotive industry, electronics, fashion, and mechanical engineering.

Our aim is to be the market leader in contract logistics, a strong player in road, air and sea freight, a leadingoperator in last-mile delivery in B2B and B2C shipments, and one of the key facilitators of eCommerce. Wedevelop transports between countries using smaller transport units, and we also develop the terminalnetwork. We are a significant logistics operator in Russia. We create solutions that enable shopping for goodsonline.

Business / Itella Russia / Business environment and strategyPosti Annual Report 2015


Key events in 2015Active dialogue and continuous discussions with our customers produced good results. During the year, wewon significant new accounts in sectors such as the electronics and food industries. In spite of the downwardtrend in the Russian economy, we not only acquired new customers but also reacquired some old customers.

During the year, we launched and developed new products and services in line with our strategy. We had aparticular focus on the quality of our work. Our customers have also noticed this. This was reflected in ourcustomer satisfaction survey, with our customers particularly praising the quality of our transport services. Ourcustomers value us and consider our company to be a reliable, responsible and professional provider oftransport services. There is also room for further improvement: our customers expect us to have even moreflexible and quick decision-making in our logistics services.

In September, we opened a new warehouse in Aksay in the Rostov region. The warehouse is custom-built forour customers by the property developer A2, with whom we concluded a long-term lease. Procter & Gamble isone of the largest customers of the warehouse. Establishing the warehouse center creates more than 100permanent jobs in Aksay, and the number of employees may even double from that amount during peakseasons. We also opened a total of five new eCommerce hubs, or central terminals, during the year. Theterminals are located in Moscow, St. Petersburg, Rostov-on-Don, Novosibirsk, and Yekaterinburg.

Southern Russia is an important market area for us. We have an office in the Port of Novorossiysk. We believethat the port will play a significant role with respect to changing traffic flows, and that interest amongbusiness customers in our company’s operations in the Southern regions of Russia will be maintained in spiteof the current crisis. We are well positioned for these changes: our two warehouses in the region have acombined capacity for more than 40,000 standard pallets.

Business / Itella Russia / Key events in 2015Posti Annual Report 2015


RecognitionsIn November, our company was recognized in an event in Moscow where awards were handed out to Russia’sbest logistics operators in 2014. Itella won the category “Best logistics operator serving internationaltransport corridors”. We were also recognised as a leading company in the logistics services market andnamed among the five best logistics operators in Russia. We have won awards in various categories for overten years.

The comparative rating of the best logistics operators in Russia is organized annually by the Euro-AsianLogistics Association, which is the largest logistics industry association in Russia and CIS. The comparisonincludes international, national, and regional operators.

In July, Itella was selected among the best employers in Russia in “The Captains of Russian Business” employercompetition. More than 200 companies participated in the company, with 15 companies receiving awards.Itella was in the top 15 with companies such as Pepsi, Unilever, Citibank, and Leroy Merlin.

Business / Itella Russia / RecognitionsPosti Annual Report 2015


OpusCapitaThe key success factors of today’s companies include efficient and automated financial processes and theircontinuous improvement. OpusCapita provides solutions setting the new standard for companies’ financialprocesses. Customers can choose from OpusCapita’s offering to put together a service portfolio that bestsuits their needs: software solutions, combinations of software and services or financial managementoutsourcing partnership.

Our areas of special expertise include Purchase-to-Pay and Order-to-Cash processes, as well as outsourcingservices for financial management and documentation flows. Our services and solutions enable the extensiveintegration and automation of processes to maximize the added value for the customer organization. As anew service, we also offer supply chain financing to our customers.

We have more than 11,000 corporate customers and software users in approximately 50 countries. We haveoffices in eight countries employing some 2,300 professionals. In 2015 we delivered 205 million electronicmessages, 304 million scanned documents and 31 million printed letters.

Business / OpusCapitaPosti Annual Report 2015


Business / OpusCapitaPosti Annual Report 2015


Business environment and strategyOpusCapita’s business environment is influenced particularly by the automation of knowledge work and therelated use of robotics, e-invoicing, and payment period management.

The use of robotics is becoming more commonplace, and the future will also bring robots that are capable oflearning and independent deduction. We are the first Finnish company to roll out software robotics inproduction operations. Our software robots work every day to support our customers’ financial managementand payroll administration by analyzing large quantities of data to identify changes in wages and salariesand verifying the accuracy of changes recorded with regard to employment relationships.

The proportion of e-invoicing in the invoice traffic of businesses and organizations is growing continuously.More than 40% of all B2B invoices and invoices between businesses and the public sector are now electronicin the Nordic countries. The regulations contained in new EU directives scheduled to enter into force at theend of 2018 include a requirement for public organizations to have the capacity to accept e-invoices relatedto public procurement. This requirement will impact more than 100,000 public administration offices andinstitutions in Europe. We are a pioneer in e-invoicing in Europe.

On March 3, 2015, the Finnish Parliament approved a legislative amendment stating that the paymentperiod of invoices between businesses must not exceed 30 days. This legislative amendment and the newfinancing systems that are about to be introduced to the market present good opportunities for supportingthe competitiveness and operating capacity of Finnish SMEs. According to our survey, 75% of Finnishcompanies see changes to payment periods as being significant with respect to their financial situation. Wehave complemented our service portfolio by launching a supply chain financing solution that allowscompanies to offer affordable financing to their suppliers using standardized processes.

In OpusCapita, we started to work on defining our new strategy in late 2015. Our goal is to createinternational growth through scalable buyer-supplier ecosystem solutions while ensuring stable andprofitable business operations in our traditional business areas in the Nordic countries. We will continue toshape our new strategy in the first half of 2016.

Business / OpusCapita / Business environment and strategyPosti Annual Report 2015


Key events in 2015In the spring, we acquired the Swedish company Kredithanterarna to strengthen OpusCapita’s position in theSwedish market. Our goal is to improve the efficiency of our customers’ financial processes to free up as muchworking capital as possible. The acquisition allows us to offer an attractive end-to-end solution for themanagement of our customers’ cash flows and to help them optimize their working capital.

Being a company that wants to be at the forefront of development in robotics, we were one of the foundingmembers of the Airo Island Association (Artificial Intelligence & Robotics). The aim is to have professionalsand operators in the fields of AI and robotics working together on creating new products and concepts thatwill allow Finland to retake its position among the world’s leading countries in leveraging and developingdigitality as well as creating innovations related to robotized service products.

In September, we discontinued our operations in Slovakia after operating there since 2008. The decision wasbased on our strategy of withdrawing from markets in which we have not achieved the position of marketleader in locally provided services.

OpusCapita got a new CEO at the beginning of October when Patrik Sallner joined the company. Beforejoining OpusCapita, he was the CEO of MariaDB Corporation.

Late in the year, we sold our businesses serving the local markets in the Baltic countries to BaltCap. Thetransaction included OpusCapita AS, which operates in Estonia and Latvia, as well as UAB OpusCapita, whichoperates in Lithuania. We nevertheless continue to operate our Baltic centres of expertise, which servecustomers outside the Baltic countries. The transaction allows us to focus on our strategic business areas inEurope.

Business / OpusCapita / Key events in 2015Posti Annual Report 2015


New products and servicesDuring the year, we launched a supply chain financing service for Finnish companies. It allows SMEs to receivepayment in a matter of days. In relation to the new service, we concluded a strategic partnership agreementwith PrimeRevenue. By leveraging PrimeRevenue’s platform for working capital finance solutions, we candeliver a unique range of multi-funder supply chain financing solutions. Such a large-scale financing solution,with hundreds of suppliers, has never before been offered in the Nordic region.

Business / OpusCapita / New products and servicesPosti Annual Report 2015


RecognitionsAccording to a corporate image survey of the ICT sector carried out by Taloustutkimus, OpusCapita is one ofFinland’s most highly regarded and best known software providers. Conducted in spring 2015, the extensivesurvey assessed perceptions and awareness with respect to operators in the ICT sector.

In the survey, OpusCapita was grouped together with 25 companies operating in Finland. We ranked sixth inthe assessment of the most highly regarded companies among this group. Our perceived strengths wereidentified as professionalism and expertise. We also received good scores on end-to-end solutions, productperformance and functionality, as well as understanding customer needs.

Business / OpusCapita / RecognitionsPosti Annual Report 2015


SUSTAINABILITY

Sustainability at PostiSustainability has been a cornerstone of Posti’s operations for nearly 400 years, since the early days of postaloperations. Since then, our business operations and their geographical coverage have been significantlyexpanded. Our commitment to responsibility has become even more important – it is part of our strategy, it isbased on our shared values, and our customers also expect it from us to an increasing extent.

Posti announced its new strategy in the summer, with the primary objectives of renewing Posti to make it acustomer-oriented, first-class service company and pursuing profitable growth in new services. For this reason,we also updated our material sustainability aspects and targets for the coming years. The materiality analysisconsisted of an information collection stage based on interviews with key individuals, stakeholderperspectives, and an analysis of the megatrends and peer companies. Based on the results of this work, thecorporate responsibility steering group updated Posti’s material sustainability aspects in a workshop, theresults of which were validated by the Management Board.

We divide our sustainability into four areas: responsible service provider, sustainable business, creating valuefor stakeholders, and engaged multi-skilled employees. The figure below describes the content of each areain more detail.

The four areas of sustainability

Sustainability / Sustainability at PostiPosti Annual Report 2015


Management of sustainabilitySustainability is part of our daily work and management. At Posti, management isbased on our values: succeeding together with the customer, driving forimprovement and innovation, taking responsibility, and winning together. Goodmanagement supports the achievement of these targets and fosters a positivework atmosphere.

Posti is committed to operating in a responsible and ethical manner. Posti’s wayof working is documented in more detail for personnel in the company’s Code ofConduct. The Code of Conduct covers compliance with laws and regulations,good business practices, non-discrimination and equality, conflicts of interest,ethical commercial practices, and environmental responsibility. The Code ofConduct also specifies the anonymous whistleblowing channels establi

annual report 2015annualreport2015.posti.com/filebank/1229-posti_annual... · 2016. 3. 24. · year...

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